Renesas Looking For A Clean Start With New Leadership

To say that the inventory correction process at Renesas Electronics (OTCPK:RNECY) has been painful would be tantamount to saying that Michael Jordan was pretty decent at basketball. Renesas has been hammered not only by a global slowdown in auto production but also significant weakness in China and among its Japanese clientele that serves Chinese customers (like Fanuc (OTCPK:FANUY), Mitsubishi Electric (OTCPK:MIELY), and so on). On top of that, it looks like my worries about market share loss have proven true, with even management acknowledging share loss in its core auto business (although they claim it's due mostly to discontinuing lower-margin products).

When I last wrote about Renesas, I thought there could be at least one more significant correction to expectations on the way, and that has been the case, but the pessimism on the shares was such that they're more or less flat with where they were at the time of that last article. With the inventory correction process mostly over, a new CEO, and IDTI now in the fold, Renesas should be able to return to a more growth-driven plan. I do believe the shares are undervalued, but there are still outsized risks to consider with this stock, including suboptimal ADR liquidity.

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Renesas Looking For A Clean Start With New Leadership